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Timing of Funds

We understand that ARP funds must be “obligated” by 2024 but expended by 2026. What specifically meets the definition of “obligated”?

The American Rescue Plan Act of 2021 (“ARP”) states that the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) can be used to cover costs incurred by December 31, 2024.[1] The U.S. Department of the Treasury’s (“Treasury”) CSLFRF Final Rule specifies the “interpretation of ‘incurred’ to be equivalent to the definition of ‘obligation,’ based on the definition used for purposes of the [Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR § 200 (the ‘Uniform Guidance’)].”[2]

In 2 CFR § 200.71, the Uniform Guidance defines “obligation” as “orders placed for property and services, contracts and subawards made, and similar transactions during a given period that require payment by the non-Federal entity during the same or a future period.[3] In other words, funds must be committed to particular eligible uses by the end of 2024. Funds may be expended after 2024 so long as the payment occurs before December 31, 2026.

The Final Rule states that recipients “must return any funds not obligated by December 31, 2024. A recipient must also return funds obligated by December 31, 2024 but not expended by December 31, 2026.”[4]

Last Revised: March 16, 2022

[1] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq., at 602(c)(2)(a), available at: https://www.congress.gov/bill/117th-congress/house-bill/1319/text#HAECAA3A95C4E4FFAB6AA46CE5F9CB2B5.

[2] Treas. Reg. 31 CFR 35 at 357, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[3] Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR § 200.71 – Obligations, available at: https://www.law.cornell.edu/cfr/text/2/200.71.

[4] Treas. Reg. 31 CFR 35 at 414, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.